Oklahoma Store owners seek changes in tobacco tax stamp rules

Oklahoma City, Oklahoma (AP) 10-07

Convenience store owners don’t have a problem with tobacco compacts reached between the state and American Indian tribes, but they would like to see everyone abide by the rules.

Store owners and lobbyists told a legislative interim study group on Thursday that Oklahoma should return to a single tobacco tax stamp system where all retailers pay the same amount and the state rebates money back to the tribes.

Presently, the Oklahoma Tax Commission issues seven different cigarette stamps, and where the smoke shop is located determines how much in taxes the shop pays the state.

Nontribal stores have $1.03 stamp, while the $0.86 stamp is for stores owned by tribes that have compacts with the state.

Some border tribal stores can also qualify for a $0.06 stamp, which many say is being used in more stores than are eligible for the reduced tax rate.

Don Williams, a lobbyist with the Oklahoma Wholesale Marketers Association, said there are 219 tribal retailers in the state who sell cigarettes and 4,800 nontribal stores. Only 39 tribal retailers qualify for the lesser stamp, he said.

Yet Tax Commission records show $344.5 million in total taxes was collected from January of 2005 to August of 2007, and $227.4 million of that came from sales of $0.06 stamps, or 66 percent.

“We have no quarrels with the provisions of the compacts,” Williams said. “We just want to see them enforced.”

Members of the House Revenue and Taxation Committee have been reviewing all aspects of the state’s tax code in search of possible reforms.

Jim Griffith, owner of On Cue Marketing, which includes 35 convenience stores across the state, said some stores are abusing the $0.06 tax stamp at an unfair disadvantage to nontribal and tribal stores that are following the law.

Other stores are selling contraband cigarettes from other states without paying a tax at all, Griffith said.

A better system would be for every store to purchase one tax stamp, and legitimate tribal stores currently buying stamps at a lower rate would be able to apply to the Tax Commission for a rebate for the difference in price. That way, each store is paying the proper taxes, he said.

Tony Mastin, director of the Tax Commission’s tax policy and research division, said his agency performs audits and inspections, but needs some help from the Legislature to help further enforce the law.

Right now, the commission can confiscate cigarettes being sold illegally with the wrong tax stamp, but the law does not allow them to destroy the cigarettes.

Instead, the commission must warehouse them until the local county sheriff can sell them at auction.

Mastin said he will ask the Legislature to change the law next year to allow the commission to just destroy contraband cigarettes.

Information from: The Oklahoman, http://www.newsok.com